Blended tax rate proposed for all condo hotels

The municipality is recommending that all condo hotels be taxed equally by blending the commercial and residential tax rates and thereby ending discrepancies within the current legislation.

If the municipalitys proposal is approved by B.C. Assessment, the independent organization responsible for classifying properties, a new accommodation class would replace the two existing classes in strata hotels which are currently defined as class 1 (residential) and class 6 (commercial).

"All properties that operate similarly should be treated equitably. In other words, they should all be classified as the same," said Jennifer Beresford, manager of strategic planning for the municipality, who drew up the recommendations in response to a Grant Thornton/B.C. Assessment policy discussion paper.

Creating a new accommodation class and blending the tax rates will also provide much-needed stability in the municipalitys tax revenue, she said.

"Weve certainly been pushing very hard for change because it has such a significant impact on our municipal revenues and it is such a large portion of our total tax base," said Beresford.

Whistler has a very high concentration of strata hotels, also known as STOCAPs  Short Term Overnight Commercial Accommodation Property. They make up about 80 per cent of the total tourist accommodation.

Although these strata condos operate as commercial hotels, they fall into two tax classifications with 36 per cent (or 1,324 units) classed as residential and 64 per cent (or 2,385 units) classed as commercial.

Before the discussion policy paper was presented to the various provincial stakeholders about three weeks ago, Whistler had not pursued the option of creating a new accommodation class.

Instead, they had been looking at defining all strata hotels as either class 1 or class 6 and discussing the various consequences of each option with the provincial government.

For example, changing all the strata hotels to class 1 would have a significant detrimental financial impact on Whistler and the province.

If all class 6 properties were reclassified as residential Whistler would loose $4.2 million in tax revenue for 2002.

But, the municipality sees the condo hotels as essentially fitting into the commercial class or class 6.

"We believe that these strata hotels are commercial operations and the acronym STOCAP (Short Term Overnight Commercial Accommodation Property) which they are, reflects that," said Beresford.

"In its purest form, in theory, they should fall into Class 6."

The municipality has presented this as its second choice or course of action to B.C. Assessment.

This option would have a greater impact on the class 1 STOCAPs much harder than the proposed blended tax rate.

"The other thing the new class would do is it would enable us to implement a tax rate that is not too harsh for the property owners that are class 1," said Beresford.

As it stands, the government would like to see the issue resolved before the 2003 assessment roll, putting an end to 8-year-old confusing legislation.

Beresford said the municipalitys recommendation is the best resolution, not just for Whistler, but for all other municipalities in B.C.

"We saw that as a solution that would not only enable Whistler to achieve its objectives, but it would be able to be implemented in a consistent and feasible way in other communities that perhaps have a different mix of vacation property," she said.

There is one important stipulation to the municipalitys recommendation.

The municipality supports the recommendation for a new accommodation class based on the fact that it can set its own tax rate controls, as it has in the past.

"It certainly provides an alternative that gives flexibility to all the municipalities to deal with their own local solution," she said.

"We see this an opportunity for local governments to manage in the way they see as appropriate at the local level."